Oct. 24--State officials are telling a local Medi-Cal system that has endured financial twists and turns it must make several changes to improve operations and show solvency.
If the Gold Coast Health Plan fails to meet a correction plan imposed by the state, it could face penalties that range from sanctions to the termination of its about $300 million annual Medi-Cal contract. But on Tuesday, an administrator with the California Department of Health Care Services said officials are confident leaders of the 1-year-old health insurance plan that serves 100,000 low-income Ventura County residents will resolve the issues.
"Our goal is to give them a road map," said Margaret Tatar, chief of the health care services department's Medi-Cal Care Managed Care Division. She said the state supports the efforts of plan leaders but is also prepared to act if the system can't meet requirements.
"We have an obligation to consider the next steps," Tatar said. "We're confident the plan will succeed."
Gold Coast launched its services in July 2011 as part of a state mandate to reform a Medi-Cal program that had previously been administered by the state. The new managed care plan is locally run and governed by an 11-member commission.
The plan suffered from dramatic turnover, including the resignation of under-fire CEO Earl Greenia in March, and problems that have ranged from a backlog of claims to overpayment.
Concerned about the plan's financial stability, state leaders appointed an outside monitor early this year to review and work with Gold Coast.
State officials earlier this month imposed a corrective action plan listing several milestones the plan must meet by the end of the year or earlier, including improving its equity, reducing the payment backlog and filling several vacant leadership positions such as chief financial officer and chief operating officer.
Plan leaders said they've made significant progress already, including decreasing their inventory of claims by two-thirds. They are pursing more changes to improve financial performance. Gold Coast CEO Michael Engelhard said the plan also expects to announce a new chief financial officer within a week.
"We take this dead serious," said Dr. Robert Gonzalez, chairman of the commission that governs the plan. "We intend to meet every one of the state requirements."
Gold Coast continues to deliver care and pay its providers, Engelhard said. Access hasn't been impacted.
The correction plan promises consequences if Gold Coast can't show solvency as required by its contract with the state. In that event, Gold Coast would either have to merge with a financially viable managed care plan or dissolve operations.
But Tatar said Tuesday she couldn't speculate on either of the scenarios. She said the correction plan was intended as unambiguous input on how Gold Coast can comply with state standards.
"We're confident that the board and the new CEO will adhere to the parameters we've set out," she said.
Engelhard, former chief financial officer for one of the state's largest public health plans, took over as CEO of Gold Coast in September. He characterized references to dissolution and other possible consequences as contractual language used commonly.
"While this is a standard template contract, we take it very seriously," he said, honing in on dissolution. "I don't think it's a very likely scenario at all. I'm not going to say it's zero."
As far as its solvency, Gold Coast typically operates with about $45 million in the bank. That's enough to carry the plan for two months if all revenue stopped, Engelhard said. But equity is estimated by subtracting all projected liabilities from assets and fell from $5.87 million in July to $443,858 in August.
The drop came largely because of changes in calculations that dramatically increased the plan's projections of its health care costs. Engelhard said the monitor appointed by the state to review Gold Coast concluded those costs had been underestimated by the plan.
Now, Gold Coast has submitted to the state an updated calculation for projecting costs. Engelhard said the plan may be allowed to apply a $4.8 million contingency reserve to its equity calculations. Gold Coast staff is also working to identify cases where providers were paid too much or where Medi-Cal was billed instead of Medicare.
"We're making sure we're paying accurately the first time," Engelhard said.
The correction plan also deals with reviewing rates paid to providers, reducing refunds of claims and the reporting of patient visit data to the state. It compels the plan to fill five vacant administrative positions by Nov. 15. Equity milestones have to be met by the end of the year.
Engelhard said the plan is making progress but acknowledged the tight deadlines.
"We're on a short leash," he said.
(c)2012 Ventura County Star (Camarillo, Calif.)
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